Commerce Recommends Amendments to Copyright Act Statutory Damages Provisions

Earlier today the U.S. Department of Commerce issued a report titled White Paper on Remixes, First Sale, and Statutory Damages, which recommends amendments to U.S. copyright law that would provide more guidance and greater flexibility to courts in awarding statutory damages. According to the Commerce Department, the recommended amendments would ensure continued meaningful protection for intellectual property while preserving the dynamic innovation that has made digital technology so important to the American economy. 

This new report follows up on issues first discussed in a 2013 Internet Policy Task Force Green Paper, Copyright Policy, Creativity, and Innovation in the Digital Economy, and is the product of two sets of written comments and five public meetings and roundtables conducted through the following year. The Green Paper provided the most thorough and comprehensive analysis of digital copyright issued by any administration since 1995 and noted the need for further analysis of the three policy issues that are the focus of the new report. 

“Through extensive public consultations, the Internet Policy Task Force has produced a detailed analysis of important policy issues raised for copyright in the digital age,” said U.S. Secretary of Commerce Penny Pritzker. “Its recommendations will maintain strong and balanced copyright protection while preserving the free flow of information required for innovation and our digital economy to thrive.” 

The Task Force report makes recommendations on three separate issues. As the title of the report suggests, these issues relate to statutory damages, the first sale doctrine and remixes. 


Statutory Damages 

With respect to statutory damages, which are authorized pursuant to 17 U.S.C. 504(c), the White Paper explains that the Task Force limited its inquiry on the level of statutory damages that may be assessed against individual file-sharers and against online services that may be secondarily liable for infringement of a large number of works. The Task Force recommended threes amendments to the Copyright Act: 
    Incorporate into the Copyright Act a list of factors for courts and juries to consider when determining the amount of a statutory damages award;
    Implement changes to the copyright notice provisions that would expand eligibility for the lower “innocent infringement” statutory damages awards; and
    In cases involving non-willful secondary liability for online services offering a large number of works, give courts discretion to assess statutory damages other than on a strict per-work basis. 

The Task Force also supports the creation of a procedure for handling small claims of copyright infringement and believes that consideration should be given to the Copyright Office proposal to establish a small claims tribunal.
The creation of a small claims process, as good an idea as it really is, will likely prove as difficult for copyrights as it has been for patents thanks to the Seventh Amendment to the Constitution. 


First Sale Doctrine 

With respect to the first sale doctrine, the report acknowledges that the doctrine provides many benefits to the public, but “[a]mending the law to extend the first sale doctrine to digital transmissions of copyrighted works is not advisable at this time.” The report explains that the Task Force has found insufficient evidence to show that there is a change in circumstance in the markets or technology that requires action on amending the first sale doctrine. At the same time the Task Force says that the risks the primary markets of copyright owners have not diminished. The Task Force also cited innovative business models and new licensing terms as providing some benefits traditionally provided by the first stale doctrine. Thus, it seems fair to say that on first sale the Task Force is recommending a wait and see approach moving forward. 


Remixes 

With respect to remixes, the Task Force acknowledged that it is important to continue to allow a broad range of remixes to thrive, ensuring that a vibrant fair use space coexists with effective licensing structures. Nevertheless, the Task Force concluded that there is insufficient evidence to warrant amending existing law to create a specific exception or a compulsory license for remix uses. The Task Force does, however, think it would be appropriate for the negotiated development of guidelines that provide greater clarity as to the application of fair use to remixes, as well as education aimed at broadening an understanding of fair use. 


Internet Policy Task Force 

The report is a product of the Department of Commerce’s Internet Policy Task Force. The Task Force is made up of representatives from the United States Patent and Trademark Office (USPTO), the National Telecommunications and Information Administration (NTIA) and other Commerce Department agencies.